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Vistagen Therapeutics Inc (VTGN) Finds Stem Cell Partner In Bayer AG (ADR) (BAYRY) With Phase II TRD Data On Tap

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We last covered Vistagen Therapeutics Inc (NASDAQ:VTGN) back in September, focusing primarily on its flagship AV-101 for treatment-resistant depression (TRD). A modified version of ketamine, Vistagen believes AV-101 can be an effective adjunctive therapy for patients suffering from TRD, and we will have a much better idea if this is the case next quarter when Phase IIa topline data is due.

In the meantime, the firm has announced that it is partnering with BlueRock Therapeutics, the brainchild of pharma giant Bayer AG (ADR) (OTCMKTS:BAYRY) and Versant Ventures, on cardiac stem cell technologies that it had acquired from the University Health Network (UHN) of Canada. These assets had been sitting idle while Vistagen focused on AV-101, until BlueRock expressed interest in clinically developing them.

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The patents Vistagen Therapeutics Inc (NASDAQ:VTGN) originally acquired cover a range of technologies used to create stem cells for three specific areas of regenerative medicine – heart, liver and cartilage – that can be spread across a wide number of different target indications. This acquisition builds on a prior agreement set up in 2007, which saw VistaGen pick up two early stage technologies, related specifically to cardiac cell regeneration.

Under the terms of the sublicense, VistaGen will receive an upfront cash payment of $1.25 million, as well as potential future milestone payments and royalties.

The deal itself isn’t particularly transparent – we don’t know how the milestone and royalty structure side of the equation is structured – but it appears that the two technologies that BlueRock is interested in are the earlier two of the five total that UHN originally licensed to Vistagen. These were set to expire later this year, and according to the SEC filing outlining the sublicensing, the entities involved have agreed to an early termination of that arrangement, allowing for the fresh agreement to go ahead.

So it’s a $1.25 million deal, in what is essentially preclinical technology – why should this move the stock at all? Because BlueRock is not just some tiny biotech looking to pick up some cheap stem cell technology; it’s one of the most well-funded stem cell startups ever with Big Pharma backing by Bayer AG (ADR) (OTCMKTS:BAYRY) and Versant. The two entities committed $225 million in series A capital to BlueRock, capitalizing the company for at least the next four years, and as the company’s pipeline matures, we expect it won’t have any difficulty tapping its lead Series A investors for further capital, assuming it can get some momentum in the stem cell development space.

Why this is good for VistaGen beyond $1.25 million in the bank is that the cardiac technologies it has licensed to BlueRock are designed to aid the creation of epicardium cells from pluripotent stem cells, something that no medical research team has yet been able to accomplish. Epicardium cells are the inner heart cells, and their successful development could change the way healthcare deals with cardiac issues and events. They play a huge role in cardiac development, and this makes them perfect for helping patients recover from things like muscle wall weakening, heart attacks, wider heart disease – a wide range of cardiovascular impairments.

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